Tama Company's capital structure consists of common stock and convertible bonds. At the beginning of 2013, Tama

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Tama Company's capital structure consists of common stock and convertible bonds. At the beginning of 2013, Tama had 15,000 shares of common stock outstanding; an additional 4,500 shares were issued on May 4. The 7% convertible bonds have a face value of $80,000 and were issued in 2010 at par. Each $1,000 bond is convertible into 25 shares of common stock; to date, none of the bonds have been converted. During 2013, the company earned net income of $79,200 and was subject to an income tax rate of 30%.

Required:

Compute the 2013 diluted earnings per share.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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Related Book For  answer-question

Intermediate Accounting Reporting and Analysis

ISBN: 978-1111822361

1st edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

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